2.1 Selected functional area #1: Marketing Management & DM
In 2020, the global craft beer market size was up to $95.23 billion (Craft Beer Market). With the spread of COVID-19 from 2020, there is no doubt that craft beer industry was affected negatively. The research shows that the craft beer market is expected to grow in the following years as negative impact of COVID 19 becomes less and less. The projected growth will be $210.78 in billion in 2028 (Craft Beer Market, 2022). What’s more, it is very possible that the market demand is going to be higher than pre-pandemic level.
In Maine, craft beer industry experienced slow development under the impact of COVID-19 pandemic. Many businesses lost the ability to bring visitors in, which caused a hit to the development. What’s worse, brewers also faced supply chain challenges, staffing shortages, and increasing costs (Crowell, Chris, 2022). In 2015, only 9.5% of all beer were sold in Maine. In 2020, the percentage increased to 14 (Crowell, Chris, 2022). Breweries business owners believe that there is room space for this industry to grow in Maine, especially in the following five years. Portland, Maine is the craft beer capital. There are over 70 breweries. Portland has been considered as a beer lover’s paradise. To show the love for beer, Portland people even organize beer festivals, beer event week, and beer holiday festival to celebrate the special moment.
It is very necessary to target at the correct customers to develop the new system of Brew Pub. We plan to target at people who meet the legal drinking age in Portland, Maine. In this target segment, no matter you are male or female, no matter you are young or old, no matter you earn much or little, you can buy a beer, taste it, and enjoy it. According to research from an analytical firm, Portland ranks No. 1 with the most breweries per 50,000 people in the United States (Lusignan, Kate, 2019). Not only local people, but also visitors are attracted to Portland for beer. With customers’ love and passion on beer, the Brew Pub can be set in any restaurants as it is a restaurant-brewery. The feature of Brew Pub is that customers can either buy beer to-go or drink at restaurant. Also, restaurants can distribute beer to off-site accounts. As long as there are customers in restaurants and bar, the sales of beer can be highly expected. We have a prediction that summer would be a season when the sales amount would reach the peak. For daily sales, we predict that sales at night and weekend would be a great scene.
The competition is from two perspectives. Firstly, the competitors we are facing are local breweries, such as microbrewery, taproom brewery, and other traditional breweries. Although many breweries were hit by the COVID-19 pandemic, there are still increasing numbers of breweries in Maine. Before the COVID-19 pandemic, there were 154 breweries. By January 2022, there has been 160 breweries (Crowell, Chris, 2022). It shows that the competition is fierce and severe. Many people have accustomed to the traditional breweries. It may take some time to attract customers’ attention to the brand-new system and build interest in the new system. Secondly, there will be competition from existing Brew Pub service. For example, Gritty McDuff’s Brew Pub, Liquid Riot Bottling Company, Brickyard Hollow are some of the restaurants with Brew Pub systems in Portland Maine. Some customers may have already had their own favorite Brew Pubs. We need some more efforts to get their attention and encourage their purchase. As a new entrant in the business industry, reducing costs to set low price will be a good method to attract customers. Additionally, the taste of beer will be a good and innovative selling point to attract customers’ attention. In other words, we can use innovative beer taste to encourage more and more customers to come and try and make a purchase.
References:
Craft Beer Market Size, Share & COVID-19 Impact Analysis. (2022). Fortune Business Insight. Retrieved from https://www.fortunebusinessinsights.com/industry-reports/craft-beer-market-100736
Crowell, Chris. (2022). Pandemic slowed Maine’s beer industry, but recovery is brewing, study shows. Retrieved from https://www.craftbrewingbusiness.com/news/pandemic-slowed-maines-beer-industry-but-recovery-is-brewing-study-shows/
Lusignan, Kate. (2019). Portland claims top spot for beer, based on population. Retrieved from https://www.pressherald.com/2019/06/04/portland-claims-top-spot-for-beer-based-on-population/
2.2 Selected Functional area #2 : Financial Management and DM
SWOT Analysis
We are in a very profitable market in a fast expanding economy. We regard our strengths as being our ability to adapt swiftly to market demands and to supply quality brew in a rising industry. Furthermore, we aspire to become a well-respected and well-known organization in our relevant field through aggressive marketing and quality management. Our core staff have extensive understanding and expertise of the local manufacturing market, which will aid in market penetration. However, we recognize our weaknesses as a medium-sized firm with limited expertise, as well as the prospect of new competition targeting our area. The following are summaries of the strengths, weaknesses, opportunities, and dangers.
Strengths
1.Market segmentation and execution techniques that are strategic in nature.
2. Diversified market segments: maintaining independence from a single market.
3.Combination of directorial abilities. With extensive expertise in product and commercial know-how, the directors seek to collaborate on the development of corporate strategy and long-term ambitions.
4.Creation and maintenance of a robust capital foundation
5.An aggressive and targeted marketing effort with well-defined goals and methods.
Weaknesses
1.We don’t have a good reputation in contrast to our competition.
2.Introducing new organizational procedures and individuals who have never worked together before is a challenge to the corporation.
3.A small financial basis in comparison to the industry’s key players.
4.A lack of distinct distribution channels.
5.The Internet’s establishment will present technological obstacles.
Opportunities
1.Niche specific: appreciation for high-quality beer, enjoyment, and refreshment (and integration therein).
2.The new generation of individuals and families places a far higher value on appealing packaging (image conscious).
3.The current administration and specialized agencies, such as the Botswana Export Development and Investment Authority, are pushing for the export of locally created goods.
4.Internet marketing and sales are still in their infancy.
5.A growing number of international enterprises, particularly from South Africa, are interested in entering the sector.
Threats
1.The current market expansion may result in market saturation due to competition. This rivalry might arise from a number of different causes, including:
2.Established mass-market enterprises that are developing new lines and vertically integrating in order to have complete control over supply and products supplied in their particular marketplaces.
3.New marketing methods and tactics employed by well-known items and businesses.
4.Pre-existing competition
5.Other start-up businesses spawned by strong economic growth around the country.
6.Unacceptable price hikes by overseas suppliers are possible.
3.1. Selected functional area #1: Marketing Management & DM
The Data from Globe Newswire, the global craft beer market size stood at 95.23 billion dollar in 2020 and is expected to reach 102.59 billion in 2021. The global craft beer market size will reach 210.78 billion dollar in 2028 by 10.83% growth each year. There are reasons to explain why the market of craft beer is growing up so fast because rising demand from different segments of customers. Right now, the demands about lifestyles and socializing trends are growing up fast. It is common sense to get relax by drinking in the pubs and house. Also, the incorporation of CBD reduce the taste of bitter and attract more people to try beer.
Right now, Maine has 160 breweries, it is greater than pre-pandemic which are 154 breweries. There are not only open breweries on hot locations, but also on new locations. It shows local investors have confidence about economic. Overall, 92% of brewers are predicting their sales would grow over the next five years. In 2015, local beer were sold by Maine breweries are 9.4% compare to whole beer market. In 2020, the number was increased to 14% and it is keep increasing.
For our new breweries, we can use internet to advertise our breweries. First, we can use google advertisement to attract visitors which are first time come to Maine. We can also write some article with picture in google and TripAdvisor about top 10 breweries in Maine. Lots of visitors will do destination raiders before set off. Also we can become first charity brewery in Poland, Maine. We can use “donate 5% of all proceeds” as our slogan. We will also set our breweries as a pet welcome breweries to attract family with pets.
In SWOT analysis, our strength is we are more popular in young age customer, by using internet advertisement, we can attract more new customers than other breweries. Our weaknesses are we are new breweries, we have lots of disadvantages compare to old breweries. Also, because we are new, our customer loyalty will be relatively poor, and our customer service is still in the running period. Our opportunities are whole draft beer marketing is growing up, and Poland will have more and more customers. So the marketing cake is bigger, everyone can get more than before. Our threats are covid-19, we don’t know when it will finish or will it get severe. We made predictions about draft marketing are based on right now epidemic.
In What if analysis, we made hypothesis if pandemic will consist until end of 2023, we still have confidence about our booster shoot policy and we decide to develop online sales draft beers in order to help us to overcome pandemic.
Reference
Fortune Business Insights, Craft Beer Market to Hit USD 210.78 Billion by 2028; Evolving Lifestyle and Changing Lifestyle to Boost Market Growth: Fortune Business Insights™ 2022 From https://www.citationmachine.net/apa/cite-a-website/search?q=https%3A%2F%2Fwww.globenewswire.com%2Fnews-release%2F2022%2F01%2F05%2F2361534%2F0%2Fen%2FCraft-Beer-Market-to-Hit-USD-210-78-Billion-by-2028-Evolving-Lifestyle-and-Changing-Lifestyle-to-Boost-Market-Growth-Fortune-Business-Insights.html%23%3A~%3Atext%3DFortune%2520Business%2520Insights%25E2%2584%25A2%2520mentions%2CUSD%2520102.59%2520billion%2520in%25202021.
Terry Stackhouse, Maine brewers tap into ‘cause marketing,’ research questions effectiveness 2021 From https://www.wmtw.com/article/maine-brewers-tap-into-cause-marketing-research-questions-effectiveness/36947818
Chris Crowell, Pandemic slowed Maine’s beer industry, but recovery is brewing, study shows 2022 From https://www.craftbrewingbusiness.com/news/pandemic-slowed-maines-beer-industry-but-recovery-is-brewing-study-shows/
Application of Decision Support tools
3.2 Functional area: Financial Management
Break-Even and What-If Analysis
We extensively used the break-even and what-if analysis tools to understand what will be the impacts of the changes we will make. Our main purpose was to reduce the total cost for this project through reducing the fixed costs like employee salaries, rent, utilities, supplies and other costs. With our variable costs adjusted, we changed our employee salaries with reference to the current average salaries. Besides this, the average office rent per square feet in Portland is $33.1. With the project requiring 200 additional square feet, we estimated the actual rent for the whole year to be $79,440. Keeping the other costs constant, our break-even for this project would be approximately five and half months.
From our analysis, our total fixed costs were $435,744, which we considered too high as a group. We were curious to know what will happen if we increased or decreased the total fixed costs. If we were to decrease our fixed costs to 4250,000, our break-even point would be approximately 3 months with revenue to $296,694.
However, if we were to increase our fixed costs to $600,000, our break-even point will be seven and half months with revenue of $712,066.
To reduce the fixed cost, we had to significantly reduce employee salaries. We agreed to hire one full time salespersons, one part time office Helpant, and reduced executive salaries to a quarter. Besides this, we reduced the utility, supplies and other costs. We struck a deal with our distributions so that we can cost-share the transport fees, reducing our transportation fee by half. Since our office area was small, we reduced the heat, light, and phone costs from $7,000 to $4,000. We also reduced the insurance fee from $7,000 to $5,000. On rent, we negotiated with the landlord and we managed to secure no payment increase for the next two years. Finally, we reduced our debt to $25,000 from $40,000. With all this in mind, we managed to reduce the fixed costs to
$301,494. Our break-even point also reduced to approximately 4 months with revenue of $358,139.
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2.1 Selected functional area #1: Marketing Management & DM
In 2020, the global craft beer market size was up to $95.23 billion (Craft Beer Market). With the spread of COVID-19 from 2020, there is no doubt that craft beer industry was affected negatively. The research shows that the craft beer market is expected to grow in the following years as negative impact of COVID 19 becomes less and less. The projected growth will be $210.78 in billion in 2028 (Craft Beer Market, 2022). What’s more, it is very possible that the market demand is going to be higher than pre-pandemic level.
In Maine, craft beer industry experienced slow development under the impact of COVID-19 pandemic. Many businesses lost the ability to bring visitors in, which caused
